Economic Aid to Russia The purpose of this paper is to analyze an artic

The republics of the former Soviet Union are currently undergoing drastic political, social and economic changes. Now known as the Commonwealth of Independent States, these republics are seeking a shift from a Communist state-controlled economy to a free enterprise system. In fact, this economic shift is seen as being one of the most important aspects of all the current reforms. As noted in an earlier Business Week article, "the top priority of the commonwealth leaders is to push ahead with the difficult transition to a market economy." The shift to a market economy is indeed a very difficult transition. The Republic of Russia, for example, is currently suffering with a massive balance of payments deficit. This means t

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tering local industries through imports increases the capability of those industries to turn out more exports. This results in a higher level of income for the nation as a whole, while simultaneously providing more employment for the nation's people. In addition to providing these potential benefits, the Business Week article notes that the stabilization of exchange rate will give "Russians and other former Soviets a shot of confidence in their currency" thereby encouraging "more foreign investment." It is apparent that the stabilization of the exchange rate is one way to help the former Soviet Union overcome its balance of payment deficit. That deficit will be further eliminated through the aid which is specifically earmarked for BOP-related loans and credits. The current deficit is due to a trade imbalance in which the former Soviet republics are not engaging in enough free trade with the rest of the world. An example of this can be seen in the fact that a lack of imports is causing many local industries to suffer. This, in turn, has resulted in a decline in exports, which causes the entire economy to suffer. The majority of the Western aid is intended to be used for overcoming this balance of payment problem. In partic
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Approximate Word count = 2676
Approximate Pages = 11 (250 words per page)